Consumer Education

Have questions about the debt collections process? Use our easy-to-navigate FAQ provided below to find all the answers that you need! If you feel that we are missing anything that you think should be included on this page, please don’t hesitate to get in contact with us here.

A service provider may, in terms of the contract between themselves and the consumer, hand an account over to a third party collection company of their choice for the purpose of collecting the outstanding debt. This action might be taken when you as the consumer fail to honour your monthly payment agreement with the service provider for a period exceeding 90 DAYS and no arrangement has been made nor honoured.

The process of handing over accounts to third party agencies by service providers is purely aimed at having the outstanding debt repaid in full. The collection agency with this mandate will then attempt to make contact with you as the consumer in order to structure payment arrangements and alternative payment methods.

In terms of the Debt Collectors Act, 114 of 1998, a debt collection agency may charge fees for services rendered during the collection of an account. These fees can be kept at a minimum when you the consumer make arrangements and honour them.

If you make an arrangement to pay a debt, and do not fulfil this obligation, then we will be required to contact you further to make new arrangements this incurs more cost for you. Therefore, it is in your best interests to ensure that you stick to your payment arrangements so as to avoid incurring further cost that you will be legally obligated to pay. The Debt Collectors Act, 114 of 1998, prescribes that we may not charge cost to a debtor of more than R870.00 or an equal amount to the capital / overdue amount, whichever is the lesser amount. This does not include VAT or the receipting fee of 10% on instalments.

The account is only handed over for collection purposes (debt rehabilitation) after which the collection company in question will return the account to the service provider for further action.

In order to help with this, VeriCred issues what is known as a clearance letter. This letter only implies that VeriCred confirms the full payment of the account. The obligation still remains with you as the consumer to forward this letter to your service provider in an attempt to have your credit status updated. You can request a clearance letter by utilising our online portal

VeriCred makes it very convenient for you to pay off your account by making use of different payment methods. You can either make payments at the VeriCred branch where the account has been handed over or via Pay@, EFT, or direct cash deposit into VeriCred’s bank account.

To make it even more convenient you can also pay through the Debit Order system which is very cost effective and preferred by many other consumers. For detailed descriptions on how to make payments on our accounts, please follow the link to our Payment Methods page here. You can also jump straight into managing your own payments by going through our Consumer Portal here.

The Debt Collectors Act notes that each time a debt collector calls a debtor they need to be assured that they are indeed speaking to the correct person, to protect the information pertaining to the debtors debt.

May it be noted that isn’t just to fulfil compliance issues but also to protect the debtors personal information, as well as information about their debt. This prevents Debt Collectors from unveiling private information to 3rd-parties who are not the debtor.

Debt collectors are legally allowed to charge interest. The rate of interest debt collectors can charge per annum is in accordance with the debtor’s agreement with our client, but cannot be above the prescribed interest rate. If it was agreed that interest be paid, but no specific interest rate was agreed upon, we may charge interest at a rate of 11.25% per annum in terms of the Prescribed Rate of Interest Act, 55 of 1975. This is called mora interest. If a specific rate was agreed upon, we will charge that rate of interest per year.

Interest is calculated on the overdue amount and the outstanding costs and we do not charge compounded interest, in other words, no interest on interest. If a debtor requires a settlement amount for a date in the future, our software automatically calculates the interest up to that date.

Every person in South Africa is registered with a Credit Bureau, if a person did not pay his/her accounts then he/she will be listed on that credit bureau as a default payer. Further, if a judgement has been obtain against him/her, then he/she will be listed as a having a judgement taken against him or her.

These directly affect the debtors ability to obtain credit from a credit provider. A default listing will remain on his/her name until the debt in question has been settled. Once the debt has been settled, arrangements must be made by the debtor with the creditor to update his/her information on the Credit Bureau/s. A judgement debt may only be removed from the Credit Bureaus by having the judgement rescinded by the court that granted that judgement. It is a myth that a default will remain on a credit bureau for 30 years. The National Credit Act, 34 of 2005, as amended, has brought about a change in how credit listings are maintained by credit bureaus and default listings will in all probability not appear on a debtors name for longer than 2 years. Judgement debts, however, will remain for 5 years or until rescinded. Debts that have prescribed will also not appear on any credit bureau.

There are two types of cases where this question is generally applicable; in the case of Student Debt, and in the case of Spousal Debt. Both are elaborated on below:

Student Financial Liability

All students are registered annually as provided for in the General Academic Rules, the Statute of the Universities and the relevant provisions of the Higher Education Act. A student who is registered is responsible for payment of the full year’s tuition, residence and other fees.

Attention must be drawn to the fact that the contract that forms part of the application for admittance to any University is signed by student and/or sponsor/co debtor, binds the student inter alia to the payment of the full tuition, residence and other fees as determined by the University for any fixed year of registration.

By signing and submitting a registration form, the provisions of these regulations are incorporated by reference into the contract between the University and the student, and the student accepts responsibility for the payment of all prescribed fees (regardless of whether or not an account is received).

Any amount which is from time to time due and payable by the student to the University, in terms of the University’s financial rules and regulations as their specific brochure entitles fees payable and financial rules shall be proven by means of a certificate of balance, which is issued and signed by an authorised official of the university.

Such a certificate shall be binding on the student and will serve as prima facie proof of the computation, extent and existence of the amount owing, and of the indebtedness of the student towards the University for Purpose of summary judgement, and provisional sentence.

When the student and/or his/her sponsor/co debtor are placed under debt review, no credit may be granted to the student until written confirmation is given by the debt Counsellor that all debt has been settled.

Responsibility of the Student

The responsibility for the payment of tuition and residence fees lies with the student. If the University studies of the student are financed by means of a bursary or loan, the account must be submitted without delay to the bursary or loan grantor for payment.

The responsibility lays with the student to see to it that the bursary or loan grantor pays the necessary fees to the University.

Co-debtors and the influence of marriage.

Marriage in community of property applies automatically when a couple enters into a marriage and they do not sign an Ante nuptial contract excluding community of property.

Under community of property, the couple become joint owners of all the assets (property and money) and liabilities (debts and claims) they acquired before they got married and also those they acquire during the marriage.

Liabilities

Liabilities incurred before the marriage and during the marriage become part of the joint estate. This includes student loans, car loans, personal loans, bonds and so on.

When one of the spouses has been sued and is liable for a debt, the creditor can:

1. Recover the debt from that spouse’s separate estate, if there is one; or, if there is insufficient money,

2. Recover the money from the joint estate.

The creditor need not first try to recover the money from the separate assets of the spouse who incurred the debt, unless the claim is for damages for a delict committed by that spouse.

In all other cases, the creditor has the right to sue both spouses jointly and to recover the money from the joint estate.

So in short students and co debtors are liable to pay student debts incurred as well as spouses married in community of property.

Yes. The rate of interest debt collectors charge per annum is in accordance with the debtor’s agreement with our client. If it was agreed that interest would be paid, but no specific interest rate was agreed upon, we may charge interest at the rate of 9% per year in terms of the Prescribed Rate of Interest Act, 55 of 1975.

This is called mora interest. If a specific rate was agreed upon, we will charge that rate per year. Interest is calculated on the overdue amount and we do not charge compounded interest, in other words no interest on interest. If a debtor requires a settlement amount for a date in the future, our software will automatically calculate the interest up to that date.

Under no circumstances is a debt collector allowed to threaten or harm the person or property of a debtor or those related to the debtor. We are bound by the Code of Conduct enacted under section 14 of the Debt Collectors Act, 114 of 1998, which furthermore states that a debt collector will not humiliate or use abusive, obscene, defamatory language towards a debtor or his or her relatives during any form of communications whether orally or in writing and a debt collector will not intimidate or induce a debtor to pay.

In terms of the Prescription Act, 68 of 1969, a debt prescribes after 3 years, except for a debt secured by way of a mortgage bond, a judgment debt or taxation imposed by the state or by law, which would be enforceable for 30 years. Prescription can however be interrupted by the debtor making a payment on his debt. Prescription will then start to run afresh on the due date of his next payment.

A debt review is not a judgment and it is not an administration order. A debtor can apply for a debt review in terms of section 86 of the new National Credit Act, 34 of 2005, if he believes that he is over-indebted.

The debtor can approach a debt counsellor, who must be registered with the National Credit Regulator (“NCR”), who will assist him in assessing whether he is infact over-indebted or not. It is important to verify that a debt counsellor is registered and you can do this on the NCRs website: www.ncr.org.za.

After the debt counsellor has assessed the debtors financial situation and has found the debtor to be over-indebted, the debt counsellor will propose a debt re-arrangement to all parties. Once a debtor has applied for a debt review, all credit bureaus will be notified to record this and we or our client will also be notified to not collect any further on the debt until the debt review has been finalized.

That is definitely not true. There is a misperception amongst people that the new National Credit Act, 34 of 2005 has provided amnesty for all debtors. That is a big myth. There was an opportunity for people to get amnesty on judgment debts under R50,000.00 if they paid the debt before 31 December 2007. That opportunity has expired. There is also a misperception that an administration is a judgment. This is also not true.

The NCR is the National Credit Regulator, the organization who regulates the credit industry. They must ensure that the rights of consumers are protected and that creditors adhere to the obligations imposed on them by the new National Credit Act, 34 of 2005. They do not regulate the debt collection industry. Our industry is regulated by the Council for Debt Collectors.

The Debt Collectors Act, 114 of 1998 as amended, prescribes that we may not charge cost to the debtor of more than R870.00 or an amount equal to the capital overdue amount, whichever is the lesser amount. This does not include VAT and a receipting fee of 10% on instalments.